Saniel Bonder

Venture Microcapitalism: An Engine for National Entrepreneurship

(This is the third post in a series proposing a program of National Entrepreneurship.)

Not long ago my wife Linda and I were in the offices of a financial professional whose services have meant a great deal to us. As a side point — since it was not a concern of ours at the time — the topic of investments came up. Our advisor mentioned the name of a Wall Street financier whom I’d never heard of before. He said that only people in the know had access to invest in the man’s funds, which had been so consistently successful they’d become the stuff of legend.

I stored the man’s name away, hoping for the day when Linda and I might be able to become part of his charmed investment club.

The other day, while beginning to formulate this column, I saw the man’s name, Bernard Madoff, in a business paper. The story revealed that the legendary investor’s funds have turned out to be a massive fraud.

Concerned about his exposure, I wrote my financial advisor. He acknowledged that he, his clients, family and friends appear to have lost sums in the range of two hundred million dollars. About the task of informing his clients and other investors of what had just happened, he had two simple words: “Not fun.”

The papers and TV shows ever since are trumpeting the news of this multibillion dollar scandal — as if we need yet another one. Madoff’s own take on what he had created? Something like “a Ponzi scheme,” he admitted. All the supposed massive profits he’d been paying out for years? Mostly investment dollars from new clients coming into his funds. They had little or nothing to do with the performance of companies he supposedly funded.

I tell this story not because it is another stunning indictment of the failures of latter-day, underregulated, reptilian financial capitalism — though it certainly is one. I tell it because, to me, it sets the stage for considering a possible, society-wide response to our many current financial and economic crises.

This response I’m proposing has nothing to do with reform of securities laws and better regulation of hedge funds and the like — though those are certainly important.

It has to do, rather, with what can become a central engine for the program of National Entrepreneurship I’ve been advocating here at Good Business International in recent columns.

In the spirit of microfinance, let’s call it “venture microcapitalism.”

Pioneered most notably by Muhammad Yunus’s Grameen Bank in Bangladesh starting in the 1970s, one key element of microfinance is extremely small loans to impoverished entrepreneurs otherwise living on the margins of society. The other secret to its success, of course, has been the altruism of the lenders, who are clearly not in the business for anything like big profits.

Whether or not anyone else has used this name before, the approach of “venture microcapitalism” already has practitioners among ethically inspired entrepreneurs and investors, and by no means just in third world countries among the poor. These people are more motivated to serve good causes than to make large, never mind outrageous, profits. So they’ve become “angel”-style investors and mentors to others putting together for-profit, entrepreneurial enterprises that are green, conscientious, and intended to make benign contributions to society.

In contrast with the more aggressive profit motive even of most venture capital angels, these investors have deliberately set aside hope for all but “micro-returns” on their money. Instead, they only look to ensure that the companies they’re providing funding and advice to do indeed achieve success on the bottom line.

Their self-sacrificing generosity also proves their freedom from the astounding greed that, in the public eye, now once again epitomizes Wall Street and the most affluent Americans, including most venture capitalists.

I have written earlier that, for optimal success, National Entrepreneurship should receive the imprimatur and overt support of American governmental bodies, national, state, and local. But government is no better equipped or disposed to run effective programs of National Entrepreneurship training than it is to run private sector industries such as banking or auto manufacturing.

For that task, only tried and tested, successful entrepreneurs and business executives will suffice. Only skilled creators, sustainers, and managers of private sector, even if publicly owned, companies can impart those skills to others.

This is where vigorously enlisting the noble motives and abilities of venture microcapitalists now can set the future of American capitalism on a whole new footing. By doing so, it can help guarantee our country’s continued eminence in global affairs. And it can enable American entrepreneurs of great integrity, acumen and achievement — young and old; men and women; of all races and creeds; new to this country or long established — to redeem the reputation of American business itself.

To explore other potential contributions of venture microcapitalism to National Entrepreneurship, let’s first consider another real-time, true story. This one is very different from the dreadful news of yet another Wall Street titan’s devastating rip-off of the whole world.

It’s a simple story, just right for the holiday season. In the midst of horrific, major job layoffs from one company after another, a number of corporations have canceled plans for a traditional holiday party. Instead of just looking to cut costs, however, some of them are donating some, all, or even all and then some of the allocated party budgets to charities for the needy.

In one case, software giant Red Hat of Raleigh, N.C., the employees themselves chose to donate the company’s entire party budget to a national charity called Feeding America. The amount they’ve donated will pay for more than 800,000 meals! And the company’s leaders and staff are going even further, coming up with other ways to raise money and foodstuffs for those in need.

Compared to the relatively confined, local tidal waves of other recent recessions, the current Great Recession, or whatever it’ll be called, is clearly a global tsunami. There’s no question it will continue to flood its way through the entire American economy, and much of the rest of the world’s too, for at least many months to come.

Here at home, finding ways to contribute to and support those in need will certainly remain strong motivations for people of good will who have means and resources. And, as I’ve mentioned in other essays, the creation of a National Service initiative could not come at a better time. If sustained over years and then decades, it can help us as a society establish values of contribution, teamwork, and service that are often overlooked or even dismissed as irrelevant in the corridors of aggressive, free market capitalism.

Venture microcapitalism in the service of National Entrepreneurship can inspire, entrain, and inculcate in our society an equally important, and equally lasting, set of values. This is a way for entrepreneurs and other businesspeople who’ve done exceedingly well in the private sector to turn around and help those just starting out, or who are otherwise in need of their resources, skills, and wisdom.

As an entrepreneur myself in a relatively marginal “industry” — non-mainstream spiritual and personal growth training — I’ve always read wistfully of people starting more conventional kinds of businesses who were able to attract either venture capital or bank loans.

Also, the scale of the funding that most of us small-scale entrepreneurs in many industries really need is far less than what most venture capitalists, including traditional angels, have been looking to put to work to achieve the kind of impact and returns they’ve wanted.

Yet it’s well known, historically, that often the innovations most important for the long-term future come out of enterprises on the margins of present-day conventional society. We need look no further than the early, geeky garages of Hewlett, Packard, Jobs and Wozniak.

However, it’s not only scientific and technological entrepreneurs who can potentially contribute so much. The kinds of businesses and entrepreneurial owners who could benefit from very small-scale, “microcapitalist” support, incubation, funding and mentoring cover the entire range of possible services to human beings and all life.

And what might now seem “woo-woo” and irrelevant to many is already being recognized by others as increasingly central to our cultural and even economic future. First summarized in no less tech-oriented a venue than “Wired” magazine, former Al Gore speechwriter Daniel Pink’s bestseller “A Whole New Mind” argues in its subtitle that “Right-Brainers Will Rule the World.”

Why? Because, Pink holds, we are moving beyond the information age into an era when big-picture, holistic, integrative and high-sensitivity intelligence and skills become increasingly crucial to our capacity to interpret, process, and act on the basis of all the information crowding into our minds and lives. He’s not fantasizing. Already even big, bottom-line driven companies are hiring in some cases as many MFA’s — graduates with Masters of Fine Arts — as MBA’s. For the 21st century, these companies need people who can see global pictures accurately and integrate disparate information creatively.

Thus, to be effective, National Entrepreneurship programs must open their doors to every kind of well-intentioned business and business owner or group. The Obama administration’s forthcoming green, 21st century update of FDR’s Works Progress Administration, through which he’s promising 2.5 million new infrastructure jobs, is reaching a very different kind of potential worker than the jobless of the Great Depression.

As of September 2006 — more than two years ago — it was estimated that of our nearly 26 million small businesses in this country, more than half were home-based. Since then the bottom has fallen out of our financial institutions, our corporations, our total economy. In 2008 alone we’ve lost nearly two million jobs. Surely many of those jettisoned workers must now be fiercely motivated to liberate themselves from ever again being “downsized” by some other employer in the future.

Remember, this is the land of “the American Dream.” And one of the huge pieces of fallout from the recession of 2008 and beyond will surely be an even greater drift of the working population away from good-faith reliance on big corporations to provide financial and job security, and toward making their livelihoods and their dreams into a single, entrepreneurial adventure. 

All of which, again, points to the timeliness of a program for National Entrepreneurship. This initiative deserves enormous support, planning, promotion, and highest quality administration for many years to come. Otherwise, it will become increasingly evident that we don’t really mean for anyone to be able to fulfill the American Dream in practical, concrete ways. This, or something very like it, is what it will take to empower great numbers of Americans to provide for themselves and their families while they live out their cherished hopes and explore their ultimate potential. 

When 9-11 struck, and when the great Asian tsunami hit, people local to those events and elsewhere gathered together to help those affected through the losses, the shock and the grief, and to begin rebuilding for the future. Now, amid the massive engulfments of this continuing, global economic tsunami, we here in the United States have a unique opportunity to help one another through the shocks and get the rebuilding underway.

It’s my great prayer, hope, and intention that many American businesspeople and entrepreneurs, especially those who’ve already achieved dramatic success and influence, will learn of this idea and help others of us carry it forward. I feel privileged, honored, and blessed to be a lightning rod for this particular inspiration. But I myself have little capacity to do more than share the idea with others, among whom some, I hope many, will have the clout and resources to make it a vibrant reality all across our land.

National Entrepreneurship deserves to be brought into all our communities, our whole society. It needs to have a place at the podium in our business schools, our universities, our high schools too. All the kinds of training that can enable entrepreneurs to succeed, in all the areas of business that successful business leadership requires, should be routinely addressed in all necessary detail, and brought to life for aspiring entrepreneurs by predecessors who’ve achieved and can share much with those just learning the ropes.

It should be considered an honor and privilege to serve in this way. Only entrepreneurs and business people of high probity and ethical repute should even be allowed to do so. Success and great achievement in a well-rounded and distinguished life, not just acquisition of wealth, must be among the criteria for their selection. And willingness and desire to participate in venture microcapitalism may well be crucial too — a noble commitment to participate in entrepreneurial capitalism in a self-sacrificing, obviously generous, contributory way.

If we make it a priority to inspire, attract, and train aspiring entrepreneurs of all ages all across our land, the American Dream can increasingly become a living reality for more and more people. Our economy will become more and more firmly inoculated against the insanity and blind-faith folly that has allowed it, in this current crisis, to plunge the whole world into recession along with us.

If we don’t make National Entrepreneurship, or something very like it, such a priority, what steps will we be taking, for real, to ensure that for future generations the American Dream is anything more than a pipedream? Or even, as for many at this moment, a living nightmare?

I’m no pessimist. I’m confident we will get through this crisis, even if it takes years rather than months. I’m an optimist, yet also a realist. So I think these sobering questions are worthy of serious exploration right now, in this time of extreme economic and financial crisis for America and the whole world.

Seen in light of these questions, a program of National Entrepreneurship may be far more than just a lovely idea. In these times, it may be a national necessity for dealing with a national emergency.

Venture Microcapitalism & National Entrepreneurship

© Saniel Bonder 2008. All rights reserved.

For previous articles please click archives.

About Saniel: Harvard educated “destiny-empowerment” expert, Saniel is author of the forthcoming audio series, "Wealth Without Guilt," the provocative "White-Hot Yoga of the Heart," and many other books and programs. He hails from Sonoma, California where his unique blend of intellectual curiosity and spiritual wisdom is honed and nurtured. Saniel co-writes and co-teaches with his wife, Linda. Together they travel and teach “materiality and spirit” workshops throughout the US and internationally. His website is http://heartgazing.com/spiritmoney.